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Data, connectivity and the future of shipping

Dr. Parag Khanna is a leading global strategy advisor, world traveler, and best-selling author. He is Founder & Managing Partner of FutureMap, a data and scenario based strategic advisory firm.

In 2008, Parag was named one of Esquire's "75 Most Influential People of the 21st Century." He has traveled to nearly 150 countries and is a Young Global Leader of the World Economic Forum.

Ahead of Shipping2030 Asia, Knect365 Maritime spoke with Dr. Khanna. We discussed the future of data, connectivity, globalization, and the 3 biggest factors which will shape the shipping industry in the next 5-10 years.

 

Iain Gomersall: Connectivity is here - what does the future look like for information and data provision?

 

Dr. Parag Khanna: Information and data provision are a huge part of what connectivity is. If you ask a young person what the first thing that comes to mind is when you say “connectivity”, immediately they think of data. They think of something that is ethereal, wireless, intangible.

Those of us who are a little bit older identify it with infrastructure - whether that means highways, railways, or internet cables.

To me, connectivity is all those things.

Data, and its transfer on the internet, is the newest layer of global connectivity infrastructure, and that's really the point of departure. The purpose of it is to carry all different kinds of data.

It represents the highest value-added new dimension of world trade. Some of the benefits of greater connectivity are of course expanding and transmitting that data and how this data is utilised by businesses around the world. Yet, economists have a very hard time quantifying just how valuable it is. And that's really the intangible thing about data today.

It's not that we can't grasp where it is, how it works or what makes it so special - it’s how intangible it is in terms of its value. I think that it is, in a way, very resonant and constant with that notion of connectivity itself.

I think we have yet to realise the pricelessness of connectivity, and the pricelessness of the data that traverses through said connectivity.

The future is endless in terms of where we are now. There is a continuous build-up of infrastructure, connectivity and the volumes of data that are being exchanged through that connectivity. With that, the different purposes and how we use that data are also infinite.

There are a lot of people today who talk about the death of globalization, de-globalization etc, and it's become a mantra amongst many people who, quite frankly, don't know any better. We're only 30 years into a new phase of globalisation. The birth of the worldwide web occurred in the same year as the Berlin Wall came down, 1989 - exactly 30 years ago.

These eras tend to last for centuries, not years or decades! In my opinion, this digital dimension of globalization is just taking off.

 

IG: In your book (Technocracy in America: Rise of the Info-State) you discuss the idea of 'direct technocracy'. In your view, what is the relationship between democracy and data?

 

PK: To me, data is democracy - in a very technical way. Whether through the subordination of the leadership to the people or procedurally speaking, the process by which citizens elect their leaders through elections is itself a form of data.

It’s a process by which you can collect votes - in a very procedural way - and that’s a data point.

"X" number of people voted for a candidate "Y", based on mandate "Z". What we are trying to get at is the relationship between "X", "Y" and "Z"; votes, leader and sentiment.

Sentiment meaning policy - why did I elect you, to do what.

Where data comes in is that you need more kinds of data to determine what a government should do, beyond just who voted for them.

Did someone vote for Trump because he hates China? Did they vote for him because they believe him to be a white nationalist? Did they vote for a candidate because they promised freebies to farmers? Did they vote for Trump because he wants to build a wall between the U.S. and Mexico?

There could be 5, 15 or 25 reasons, but we don’t really know why. In short, we need more data to achieve good governance.

Direct technocracy is the idea that we have direct democracy, to the fullest extent possible.

Voting should be mandatory - in my opinion anyone over 16 years of age should be voting, not just 18 or 21. We should be collecting data in terms of individual viewpoints, sentiment, opinions on specific policies.

We also need to be reconciling those points of view. Obviously, that's what the technocracy part is about. What does government do with this data, how do they harness it? How do they make the best decisions out of it and how do they utilise it to maximise welfare for citizens?

Other kinds of data can be passive forms of data collection. What information do we see about an individual? Who is using a public service and are subsidies working in certain areas? What is happening in terms of high-school drop-out rates? Are there too many potholes in a certain road?

There is data for everything. The question is are we trained to use it? Are we going to use it well, and in the right ways?

I believe the procedural side of democracy provides one form of data. But it is one of many kinds of data that a smart, technocratic government uses to perform better.

 

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IG: Would you say that transparency is key to achieving a 'direct technocracy'?

 

PK: Without a doubt. Transparency in terms of what data one is collecting from people - it is important to be transparent with people. How will this data be used?

How and why decisions are made are also important transparency issues. You can have situations where 51% of people may want Brexit, and 49% of people may not. Does the government have an explanation or a narrative for why they do, or don't do, something?

There are potentially situations where one may have to reconcile competing views, minority views, and majority views. So, transparency at all levels is very important.

 

IG: How do shipping businesses remain sustainable and within regulatory framework conditions, yet still promote innovation and remain competitive in current markets?

 

PK: Some regulatory arrangements are promoting and encouraging innovation, while others haven't yet graduated to that level. I think for an industry that must plan long term, there is a premium on anticipating regulations, building and adapting pre-emptively towards that future. Otherwise, one is caught off-guard, so it can be very expensive to not anticipate regulations.

In my opinion, one should think of regulations today as a force that is increasingly gravitating in the direction of promoting innovation, and that itself is one of many incentives to be more innovative.

 

IG: Successful innovation needs data and purpose, among other things. In your opinion, who will win shipping’s battle for data? Shipowners? Operators? Ports? End customers?

 

PK: It should be all of the above. One way to think about it is to view data itself as an auxiliary business in many ways. For example, logistics providers are already critical to managing and optimising shipping loads. The role that data, third party providers and platforms have, has really helped to bring more participants to utilisation in the shipping industry, which is critical in the long term.

Naturally, ship owners and operators should be harnessing data much more to be as efficient as possible. In the end, that can lead to cost savings, and potentially, savings for customers as well.

 

IG: What do you think are the 3 biggest factors which will shape the shipping industry in the next 5-10 years?

 

PK: In no particular order, overcapacity, competition and consolidation. These factors are interrelated, and I would say that they will be very important to the shipping industry. I would also have to say sustainability and data harnessing.

Firstly, overcapacity, competition and consolidation are a supply side challenge. It's a physical challenge. It’s a macro-economic challenge. Shipping is an industry which is very vulnerable to global economic patterns, so that the whole set of supply side issues that relate to over-capacity, consolidation and demand forecasting, is one set of challenges.

The second is sustainability pressures. The need to innovate. The need to shift as much as possible towards sustainable energy consumption, and so forth. That's very, very important.

Finally, I believe that how the shipping industry manages to harness data better will be an important factor. Every company is a data company today. A bank is not a bank, it is a data company. A telecom is not just a telecom, it is a data company. To what extent is a shipping company now a data company? How do we optimize data as efficiently as possible?

In my opinion, these will be 3 important issues.

 

IG: At Shipping2030 Asia you will be part of a panel discussing 'Globalisation 4.0, the Blue Economy and the Asian Century'. How do you see the operating environment for shipping changing?

 

PK: In my mind, it is important to geographically frame it. Within that, are many questions – similar to what we have been discussing above. We know certain things are true, we know this a secular story, but how intelligently will this play out?

As we were discussing earlier, in my opinion, we are only 30 years into a new era. If you think about the post-cold war economic commodities super-cycle, it really thrust the Indian Ocean back to the centre of global trade. I believe that Asia's position remains very well established at the geographic centre for the industry well into the future. The greater Indian Ocean realm that was the dominant geography of the maritime Silk Road since the 15th and 16th centuries – as area historians refer to as the Afro-Eurasia zone; Africa, Europe, the Gulf countries and Asia.

Outside of the Arctic region, this area is once again a critical geography and an important are for the maritime sector. The return of Afro-Eurasia is a central theme in my book, The Future Is Asian: Commerce, Conflict, and Culture in the 21st Century.

It all does relate to Afro-Eurasian demand and the complementarities of the economies, and I think this is a very positive story.

Again, it will be a story that plays out over centuries, not years or decades.

 

Dr. Parag Khanna joins a distinguished speaker panel at Shipping2030 Asia (Part of Shipping Transformation Asia). Join us to hear from the industry leaders and change makers pioneering change in the shipping industry. Read more about Shipping2030 Asia here.

 

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